Court Orders Dish To Pay TiVo $200 Million In Patent Case

9/04/2009 3:25 PM Eastern

By: Todd Spangler

A Texas federal judge on Friday ordered Dish Network to pay about $200 million in damages and contempt sanctions to TiVo, finding that the harm suffered by TiVo by the satellite operator's continued infringement of a key DVR patent is "substantial."

That brings the total damages and sanctions Dish and EchoStar Technologies have been ordered to pay TiVo to approximately $400 million through July 1, 2009.

In June, Judge David Folsom of the U.S. District Court of the Eastern District of Texas found Dish and EchoStar in contempt of a previous patent-infringement ruling and ordered the companies to pay $103 million in damages. Dish and EchoStar appealed that decision to the U.S. Court of Appeals for the Federal Circuit, which requested scheduling of the case for November.

In his order Friday, Folsom wrote that "TiVo's suggested disgorgement of nearly $1 billion is unreasonable under the circumstances of this case. TiVo's suggested sanction seeks to punish EchoStar for its actions. While the Court can appreciate the impetus behind the desire to see EchoStar punished, the Court cannot approve such an award."

However, Folsom added, if Dish and EchoStar are unsuccessful on appeal and continue "to disregard this Court's orders, the Court will seriously entertain the award of enhanced sanctions."

In the ruling Friday, Folsom calculated the award based on $2.25 per Dish DVR subscriber per month during the contempt period, a rate that includes the jury's rate of $1.25 to compensate TiVo for EchoStar's "continued infringement" and an additional $1.00 sanction to "promote EchoStar's compliance with this court's orders."

In a statement, TiVo said, "We are confident that this ruling brings us closer to final resolution."

Dish Network and EchoStar said in a statement: "We are pleased that the district court rejected TiVo's request to award a billion dollars in sanctions and that it found that any violation of the injunction was not willful. While we disagree that any amount of sanctions was warranted, the decision confirms our belief that we designed around TiVo's patent in good faith. We believe that we ultimately will prevail on appeal."

The patent at issue in the litigation -- which dates back to January 2004 -- is TiVo's "Multimedia Time Warping System" patent, U.S. Patent No. 6,233,389, granted in May 2001. The patent describes a DVR system that allows for simultaneous storage and playback of TV programming from a cable or satellite source.

Meanwhile, the U.S. Patent & Trademark Office -- at the request of Dish and EchoStar -- is reviewing the validity of TiVo's Time Warp patent. Last month, the PTO examiner's office issued a preliminary rejection of two claims in the patent. TiVo said the action "is a preliminary finding, entered in the normal course before TiVo has had any opportunity to present its views."